ENERGY CONCLAVE 2006 PRESENTATION ON MULTIPARTY INTERESTS IN THE GAS SECTOR

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ENERGY CONCLAVE 2006 PRESENTATION ON
MULTIPARTY INTERESTS IN THE GAS SECTOR
26TH JULY 2006
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Presentation outline

• Indian Gas Sector A Few Snap Shots
• Gas Sector Dynamics
• Issues

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• Indian Gas Sector
• A Few Snap Shots

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Indian Gas Industry
Three Distinct Phases

• Before 1995
• 1995 2004
• 2005 onwards

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Indian Gas Industry

• Before 1995
• All Sectors were controlled by Govt. of India
• Administered Gas Price
• Only State Enterprises were involved
• Gas Sale was only to designated consumers
• Importance of clean fuel
• Acceptance of gas as Green fuel

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Indian Gas Industry

• 1995-2004
• REFORM PERIOD

• Acceleration of Industrial Growth
• Awareness on Energy efficiency measures
• Launch of NELP
• Import of gas under OGL
• Phased Dismantling of APM
• Increase in Gas Production
• Increasing Demand-Supply Gap
• Foreign participation up to 100
• World class gas discovery in year 2002 in KG basin

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Indian Gas Industry

• Beyond 2005
• Market Driven Regime
• Implementation of PNRB Bill
• Gas Pipeline Policy
• City Gas Distribution Policy
• Cross Border Pipeline
• Monetization of CBM
• LNG Regasification terminal
• Procurement of LNG spot cargo

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Gas Sector Players
BEFORE 1995 1995 2004 2005 ONWARDS
UPSTREAM ONGC, OIL, ASSAM OIL GAIL, IOCL, BPCL, GSPC, RELIANCE, HOEC, TATA PETRODYNE, ENPRO, SHELL, TOTALFINA, BRITISH GAS, BRITISH PETROLEUM, NIKO, CAIRN GAIL, IOCL, BPCL, GSPC, RELIANCE, HOEC, TATA PETRODYNE, ENPRO, SHELL, TOTALFINA, BRITISH GAS, BRITISH PETROLEUM, NIKO, CAIRN
MIDSTREAM GAIL, ONGC, OIL GAIL, OIL, GSPL / GSPC, GGCL, AGCL, TNGCL, GCGSCL GAIL, GSPL, BG, OIL, GSPC, GGCL, AGCL, TNGCL, PLL, SHELL, RELIANCE ETC.
DOWNSTREAM GAIL, ASSAM GAS, GUJARAT GAS, AGCL IOCL, HPCL, BPCL, MGL, IGL, GSPC, ONGC, SHELL, RELAINCE, BG ETC. GAIL, IOC, BPCL, OIL, GSPC, ONGC, CAIRN, NIKO, SHELL, TOTALFINA, BG, RELIANCE, IGL, MGL ETC.
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Gas Sector Regulation In India

• Petroleum and Natural Gas Regulatory Board Act,
  2006 enacted

INDEPENDENT REGULATORY BOARD FOR DOWNSTREAM SECTOR

• Open Competitive Bidding
• Non-discriminatory Open Access
• Uniform Regulated Tariff

Pipeline Transmission
City Gas Distribution / CNG

• Open Competitive Bidding
• Exclusivity Period

Storage, Regasification, Marketing of LNG / NG

• No Licensing Simple Registration
• Free Market Price

• Regulations to be guided by Govt. Policies

• 100 FDI Permitted in
• - Pipelines/ LNG/ Marketing Trading
• Fiscal Incentives Under Consideration
• 0 Custom Duty on LNG imports
• Infrastructure Status for Gas Pipeline

REGULATIONS AND POLICIES TO PROMOTE INVESTMENTS
AND COMPETITION
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• Gas Sector Dynamics

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Indian Natural Gas Scenario
Potential Demand Scenarios
MMSCMD
India Potential Growth Hub In Natural Gas
Sector In The Region
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Indian Gas Industry
CURRENT SUPPLY SCENARIO
MMSCMD
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Demand - Supply Gap
 Estimates for 2011-2012 MMSCMD
Current fields 55
New Discoveries 40
CBM 10
Sub Total Domestic 105
LNG Import 60
Cross Border P/L 20
Total Supplies 185
Total Demand 300
Total Shortfall 115
SUPPLY AUGMENTATION AT COMPETITIVE PRICES
CREATING INFRASTRUCTURE - KEY FOR DEVELOPING GAS
MARKETS IN INDIA
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Gas Supply Augmentation
TURKMENISTAN
IRAN
VIJAIPUR
BANGLADESH
DAHEJ
JAMNAGAR
KOLKATA
HAZIRA
BHUBANESHWAR
MUMBAI
A 1 BLOCK, MYANMAR
MYANMAR
PUNE
VIZAG
DABHOL
DABHOL 5 mmtpa
KAKINADA
KRISHNAPATTANAM
NEW GAS DISCOVERIES LNG TERMs- Upcoming LNG
TERMs- Existing TRANS NATIONAL P/L CBM
CHENNAI
KOCHI 5 mmtpa
TIRUCHCHIRAPALLI
KOCHI
MANAPPAD
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LNG Supply Augmentation

• LNG share to grow from 11 in 2005-06 to 38.4 by
  2009-10
• 12.5 MMTPA of LNG already tied up for20-25 yrs
• 10 MMTPA of LNG to be tied up

LNG TO BECOME A SIGNIFICANT LONG-TERM SUPPLY
SOURCE
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Key Drivers For Emerging Market

• Govt. incentives
• Increase in Gas Production LNG Import
• Import of gas through pipelines
• Development of CBM and Coal Gasification
• Regulatory Bill implementation
• Unbundling of transmission business
• Power Sector Reforms
• Concern for Environment
• Growth in Auto/City Gas Markets

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GAS SECTOR INFRASTRUCTURECURRENT AND FUTURE
A COMPOSITE PICTURE
TOTAL INVESTMENT US 8 Billion
BAREILLY
AURAIYA
JAGDISHPUR
AGRA
DISPUR
PATNA
PHOOLPUR
JHANSI
UJJAIN
RAJKOT
AHMEDABAD
SURAT
NELLORE
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• Issues

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Gas Pricing The Changing Phases

PRICING MOVING TOWARDS DEREGULATION
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Pricing Issues

• Demand for Gas is predominantly price sensitive
• Major gas consumers end product pricing is either
  regulated or highly price sensitive e.g. Power,
  Fertilizer
• Substantial gap in APM price ( 1.75 - 2.10 /
  mmbtu) and market price (3.00 - 9.00 / MMBTU)
• Gas price should not be under regulation which
  may dampen new exploration / market discoveries
• Selective consumer segments like domestic gas for
  Below Poverty Line (BPL) could be compensated
  through State instead of regulated gas pricing

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Key Issues

• UPSTREAM
• Incentivize EP
• Restructuring of PSC i.e. Recovery of cost
  petroleum
• Share of Profit Gas
• Rationalisation of work commitment
• Infrastructure development for monetization of
  gas
• MIDSTREAM
• Gas Grid Development
• Need for a realistic pricing
• Development of gas trading hubs / Storages
• DOWNSTREAM
• Long term supply commitment
• Rationalisation of Tax / Levis

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THANK YOU